What Is A 1031 Exchange?

At Breakwater Exchange, we help you unlock the full potential of the 1031 exchange, an IRS-backed strategy for deferring capital gains taxes when selling an investment property.

Connect With Our Experts

DST 1031 Explained

Let’s first identify a DST’s (Delaware Statutory Trust) meaning. A 1031 exchange, named after Section 1031 of the IRS tax code, lets you sell one investment property and reinvest the proceeds into another of like-kind, without immediately paying capital gains taxes. However, it’s not automatic. The IRS enforces strict timelines and property criteria, making expert guidance essential. Breakwater Exchange assists every step of your exchange, from identifying replacement properties to working with a qualified intermediary that meets federal guidelines and your financial goals.

Business Meeting In Office 1281930609

Explore Our Complete Offerings of 1031 Exchanges

Connect with Breakwater Exchange for a free consultation or custom proposal. Our experienced advisors will guide you through each step of your 1031 exchange with clarity and confidence.

Get My Free Proposal

Key Rules You Need to Know About 1031 Exchanges

1031 exchanges come with three foundational requirements: the properties must be like-kind (meaning both are investment real estate), the new property must be of equal or greater value to receive full tax deferral, and the ownership structure must match. Miss one of these? You risk disqualification.

What Properties Qualify for a 1031 Exchange?

Not all real estate qualifies. Investment properties such as rental homes, commercial buildings, and land held for income or appreciation are eligible. Primary residences, vacation homes, or properties held for personal use don’t count. The replacement property must also be in the U.S., and it must be held for the same investment purpose as the relinquished asset.

1031 Exchange Identification Rules & Timeline

Once your relinquished property sells, the clock starts ticking. The IRS allows only 45 days to identify potential replacement properties and 180 days to close. Miss either deadline, and the exchange fails, triggering a taxable event. That’s why Breakwater Exchange helps you build a strategy before your sale closes, so you’re always ahead of the curve.

Our Exclusive Line of 1031 Exchange Solutions

At Breakwater Exchange, we offer a curated suite of 1031 exchange solutions tailored to meet your investment goals, liquidity needs, and control preferences. Each option is designed to help you defer taxes while aligning with your unique financial strategy.

  • Traditional DSTs provide passive ownership in institutional-quality real estate with professional management, diversified risk, and simplified 1031 compliance.
Learn More
  • Cash Out DSTs offer strategic liquidity by allowing you to replace debt efficiently while gaining access to a portion of your equity, without triggering taxable events.
Learn More
  • Direct Title Security Solutions gives you 100% ownership of a single property through an LLC, offering full control over refinancing, sales timing, and long-term strategy.
Learn More

Access Investment Offerings Other Brokers Can’t Provide

Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

General Disclosure
All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future performance. There can be no guarantee that any investment or strategy will achieve its stated objectives. Speak to your tax and/or financial professional prior to investing.

Real Estate / 1031 Risk Disclosure
There is no guarantee that any strategy will be successful or achieve investment objectives; Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; Potential for foreclosure – All fnanced real estate investments have potential for foreclosure; Illiquidity –These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefts. Stated tax benefts – Any stated tax benefts are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.

Opportunity Zones Disclosures
Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings. Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments. Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations. Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available. Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund. Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments. Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities. Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.